NaughtyPines

NEXT WEEK'S COVERED CALL CANDIDATES: NE, CLF, AMD, WLL, OAS

NYSE:NE   NOBLE CORP PLC
3 months ago
Here are my candidates for covered calls next week. Right now, they're based solely on ROC metrics, the key being to get at least a 10% ROC if the shares are called away at the short call strike. Additionally, the focus is on sub 10.00 debit plays; underlyings of higher dollar value are generally more amenable to other strategies.

After looking at the charts, as well as doing some due diligence on the companies, I'll cull the herd ... .

$NE (O&G): Buy shares at 6.21; sell the Sept 30th 6.5 call; 5.85 db             ; $65 max profit (11% ROC).
$CLF (Mining): Buy shares at 6.09; sell the Sept 30th 6.5 call; 5.75 db             ; $75 max profit (13% ROC).
$AMD (Semiconductor): Buy shares at 7.62; sell the Sept 30th 8 call; 7.21 db             ; $79 max profit (11% ROC).
$WLL (O&G): Buy shares at 8.04; sell the Sept 30th 8.5 call; 7.36 db             ; $114 max profit (15.5% ROC).
$OAS (O&G): Buy shares at 10.27; sell the Sept 30th 11 call; 9.84 db             ; $116 max profit (11.8% ROC).
3 months ago
Comment: Think I'm going to scratch AMD off the list. It's at multiyear highs (which really isn't saying much, but I hate buying stuff at the top of the arc).
3 months ago
Comment: So, there's three possible petro plays. NE's in offshore exploration; WLL's in field exploration, acquisition, and development as is OAS. Both WLL and OAS, for better or worse, are married to shale. For reasons too numerous to mention here, I don't like companies heavily into shale, and I like offshore even less. However, NE's balance sheet looks a whole lot better than that of WLL or OAS (they both stink, hard). So, in the end, it's a toss up between the "sexier" ROC metrics of the WLL play versus the more solid balance sheet of NE. (I'm throwing the OAS overboard, since it's comparable to the WLL play, but involves more buying power for the same approximate max profit).
3 months ago
Comment: I just hate offshore sooooo much ... . Lol.
baerrus PRO
3 months ago
OAS is candidate for short sale for me. Playing Oil price downdraft if/when such develops
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NaughtyPines baerrus
3 months ago
There are so many crap heaps in the petro space; it's a virtual candy store for a short seller -- so many flavors to choose from. Shoulda coulda woulda shorted these over leveraged, shale oil exposed companies into the dirt when oil crossed the average shale breakeven. But my guess is that a lot of these shale guys will flop around down here for a bit on "hopium", life support, and oil's move back and forth across their fields' break evens before some collapse ... . This oil up move is just a brief reprieve from the executioner ... .
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